The last mile is now within sight at Blockbuster
Movielink has been around for five years, partly bankrolled by five of the major motion picture studios. Movielink customers can rent or purchase films. The films are then downloaded to Internet-enabled computers, but can also be watched on television sets through specially-equipped media center setups, Xbox 360 consoles, or AT&T's
Movielink turned heads last summer when it hooked up with Sonic Solutions
Home-delivered convenience never seemed to be much of a priority at Blockbuster. The retailer wants you in its stores. Even the popular Total Access service that has been a thorn in Netflix's
However, with Netflix starting to promote its new Watch Now service, Blockbuster is making sure that it doesn't get left behind in the digital delivery push for homebodies that companies like Amazon.com
How will Blockbuster incorporate Movielink into its existing businesses? We'll see. The company has grown its Total Access program in a hurry. The company was adding just 100,000 to 150,000 subscribers a quarter to its fledgling mail-delivered service until November's Total Access upgrade that combined postal service with free in-store exchanges. The move struck a chord with film buffs. Total Access has 3.6 million members, with 2.1 million of those coming on in just the last three quarters. That is nearly twice as many as the 1.1 million net additions that Netflix has landed over the same nine months.
Netflix has countered by lowering prices and offering online streaming of some of its more obscure titles. Watch Now covers just 3% of the 80,000 DVD titles that Netflix stocks, but beggars can't be choosers. Netflix isn't charging extra for the service, instead granting paying subscribers as many hours a month of streaming as dollars that they pay for their service. In a sign that Netflix is still unsure about the value of Watch Now, it is not discounting subscriptions to Mac users who cannot access the feature.
Movielink offers many of the hot new releases, but Blockbuster is not going to give it away to Total Access subscribers. It may offer members discounts the way it does with in-store coupon offers, but this can be a standalone growth vehicle for the company if it is able to grow it right. In its current form, Movielink is an a la carte offering. Each title has a price, with Movielink then sharing the revenue with the studio.
The Blockbuster of the future
The Movielink acquisition may seem odd because Netflix is the cash-rich company. Blockbuster has more debt than a college freshman with a credit card. But with Movielink, Total Access, and its flagship stores, Blockbuster is now an intriguing three-headed hydra, hitting celluloid connoisseurs from all angles.
Just picture walking into a Blockbuster store in a year or two. The racks don't have as many copies as they used to, with a lot of that space devoted to retail enhancements to draw in shoppers who are looking for more than just a quick flick fix. The new James Bond movie you wanted is out of stock, but in a single transaction the clerk can start up a discounted download from the store, and have it ready when you get home. You're in luck, too. A free playable demo of the new James Bond video game is also on its way to your Xbox 360. Would you care to add a digital copy of the engaging soundtrack to your order?
I know. Blockbuster is about as cool as a Members Only jacket these days. But now it's armed with a convenience store guru at the helm and scalable technology.
Terms of the Movielink purchase aren't being disclosed, but it probably isn't much. It's not just that Blockbuster is on a short leash -- with its creditors sweating out any potential shopping spree. MovieBeam practically gave itself away to Blockbuster rival Movie Gallery
Under Blockbuster's wing, Movielink can become the service that it always wanted to be. It's a good purchase. It makes both companies a little more relevant.
Note to Netflix: Watch. Now! And wake up, please.
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Longtime Fool contributor Rick Munarriz owns shares in Netflix. He also is an early adopter of the service. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.